Nvidia in Talks to Invest in Elon Musk's xAI as Startup Seeks Billions in New Funding

Nvidia Reportedly Weighing Investment in Musk's xAI | PYMNTS.com

A separate report by The Information says Musk had been in discussions with tech companies and venture firms such as Sequoia Capital, Andreessen Horowitz and Vy Capital. Musk is expecting in January to hold a major funding round that could value xAI at as high as $75 billion, two sources told the Post. And an analyst for Nvidia, speaking with the newspaper on the condition of anonymity, said that xAI's rivals would still buy chips from Nvidia even if it invests in Musk's company. "If not, this transaction would never go forward," the analyst said. PYMNTS has contacted Nvidia for comment but has not yet gotten a reply. During a Series B round in May, xAi raised $6 billion, gaining a pre-money valuation of $18 billion. The company said at the time that the new funds would help it take its first products to market, develop advanced infrastructure and accelerate its research and development. And in September, the company introduced its Colossus 100k H100 training cluster. Writing about it on X, Musk called it "the most powerful AI training system in the world. Moreover, it will double in size to 200k (50k H200x) in a few months." In other AI news, PYMNTS wrote last week about a MIT spinoff Liquid AI's creation of systems that can match current capabilities while using fewer neurons, a development that could potentially reduce the massive computing costs that have kept many businesses from investing in AI. Liquid AI's "liquid neural networks" require only dozens of neurons to guide drones and vehicles -- rather than the millions required for conventional AI systems. The technology could forge a path to reducing the computing power and energy costs that have kept some businesses from fully embracing AI technology. "It could democratize AI adoption by making AI technologies more accessible and affordable to businesses across various industries," Jesal Gadhia, head of engineering at AI company Thoughtful, told PYMNTS. "This affordability would enable even smaller companies to implement AI solutions, leading to widespread innovation, increased efficiency, and reduced energy consumption throughout different sectors. This mirrors the transition we experienced with computing: initially, only select organizations could build and operate mainframes, but now computing is ubiquitous -- from our watches to our cars."

Exclusive | Chipmaking giant Nvidia in talks with Elon Musk over investing in...

Chipmaking giant Nvidia is in talks with Elon Musk about investing in his fast-growing artificial intelligence startup xAI, a source close to the situation said. XAI -- which powers the snarky Grok chatbot on Musk's X social network -- is in talks with some investors about raising several billion dollars at a roughly $40 billion valuation, the WSJ reported this week. The Information reported he was talking to strategic investors -- meaning tech companies as opposed to investment firms -- but didn't offer any names. Venture firms including Sequoia Capital, Andreessen Horowitz and Vy Capital have been included in the latest funding talks, the tech news site reported. Nvidia -- which under CEO Jensen Huang last week surpassed Apple to become the world's most valuable company with a market capitalization of more than $3.5 trillion -- declined to comment when contacted by The Post. The company had strongly denied similar rumors in the spring. Musk is expecting in January to hold a major new fund-raising round that could value xAI at as much as $75 billion, two sources said. It's not unusual for chipmakers like Nvidia to co-invest with their customers on projects, according to industry insiders. One Nvidia analyst who asked not to be named said xAI's competitors would still buy Nvidia's chips even if it invests in xAI. "If not, this transaction would never go forward," the analyst said. In a December 2023 blog post, Nvidia said it had made investments in more than two dozen companies last year as the pace of innovation in AI and accelerated computing quickens. "Nvidia's corporate investments arm focuses on strategic collaborations," Nvidia said in the blog post. "These partnerships stimulate joint innovation, enhance the Nvidia platform and expand the ecosystem." Some insiders say an xAI-Nvidia partnership would be a natural fit, given Musk's extensive collaboration with Nvidia across his business empire. In an Oct. 17 podcast, Huang praised Musk for building the fastest supercomputer on the planet with his company's assistance in 19 days. In April, Nvidia's stock rose after Musk said Tesla would need access to more of Nvidia's high-end chips to power the electric car maker's AI plans, Barron's reported. Musk was even quoted in a Nvidia press release following the release of its advanced Blackwell AI chips. "There is currently nothing better than Nvidia hardware for AI," Musk said in the release. Musk's xAI is a direct competitor to Google's Gemini AI platform and OpenAI-backed ChatGPT.

Elon Musk's xAI startup in talks to raise funding at $40B valuation

Elon Musk's artificial intelligence startup xAI is reportedly in talks for a funding round that would value the company at $40 billion. The company, founded by the Tesla and SpaceX mogul last year, was last valued at $24 billion just five months ago after a $6 billion funding round -- which was more than double the initial target set by Musk's team. Musk is seeking to raise several billion dollars in this latest funding round for xAI, a source familiar with the matter told The Wall Street Journal. The talks are still in the early stages. Any cash raised would be added to the company's $40 billion valuation. Musk did not respond to a request for comment. Silicon Valley's AI startups have been raising billions of dollars to fund their costly technological advancements - and try to gain a lead in the AI race. Earlier this month, ChatGPT-maker OpenAI raised $6.6 billion at a $157 billion valuation -- making it one of the largest private funding rounds in US history. AI startup Perplexity is in talks to raise funding that would more than double its valuation to $8 billion, according to the Journal. Mainstream tech giants like Google parent Alphabet and Mark Zuckerberg's Meta have been betting big on artificial intelligence and funneling their profits into new projects, like Alphabet's Gemini bot. Meta is reportedly working on its own AI-powered search engine, according to The Information. "If you're training a frontier model, you need a massive amount of compute," Musk said on Tuesday during a video conference. Musk - the world's richest person with a net worth of $269.3 billion, according to Forbes - has long been involved in artificial intelligence. He co-founded OpenAI in 2015 and left the company in 2018. When OpenAI saw sky-high success with its ChatGPT chatbot, Musk created xAI and has since been trying to take the lead in the tech race. He has sued OpenAI twice this year, alleging he was manipulated to believe the company - into which he invested tens of millions of dollars - was a nonprofit. Meanwhile, xAI has built what it claims is the world's largest data center in Memphis, Tenn. The startup is training new versions of its AI chatbot, Grok, which is currently only available on Musk's social media platform X, formerly known as Twitter. xAI has plans to double the data center from 100,000 graphic processing units, or GPUs, to 200,000, Musk said on Monday. Nvidia CEO Jensen Huang has praised xAI's massive data center, calling it "easily the fastest supercomputer on the planet." But Musk's startup - which released its chatbot just four months after the company launched - is still chasing OpenAI and Google, which have years on xAI. And it seemed the company's sole revenue stream was the X Premium subscription, which includes Grok. It is unclear how lucrative the premium subscription is for xAI. As of last spring, the platform had 640,000 X Premium subscribers out of more than 400 million active monthly users, according to Statista. Last week, xAI released a tool that developers can use to build applications with Grok, adding another source of revenue. Musk has been dipping into his other companies' resources to help the company along. xAI hired some employees from Tesla and Musk has diverted thousands of Nvidia GPUs from the EV maker to the AI startup. The AI startup has discussed a deal in which it would receive some Tesla revenue for allowing the company access to its technology, according to the Journal. On a Tesla earnings call last week, Musk said xAI "has been helpful to Tesla AI quite a few times in terms of things like scaling up."

Elon Musk's xAI in Funding Talks That Could Value Company at $40 Billion

Elon Musk's artificial intelligence start-up, xAI, is in talks to raise new financing that could value it at as much as $40 billion, up from $24 billion five months ago, three people with knowledge of the discussions said. The talks are in the early stages, two of the people said, and the start-up's valuation could fall into the mid-$30 billion range if the talks continue. Investors have discussed putting another $5 billion into the company, two of the people said, a figure that could also change as the discussions progress. The talks follow a huge fund-raising effort by OpenAI, the San Francisco start-up that makes ChatGPT, which said earlier this month that it had closed on financing that valued it at a whopping $157 billion. OpenAI launched the A.I. boom in late 2022 with ChatGPT's release, spurring a funding surge for other A.I. companies, including xAI. Enthusiasm among investors for A.I. companies has cooled in recent months, as several high-profile start-ups have essentially been folded into tech giants like Google and Amazon. But xAI and OpenAI are among the few that continue to seek billions in funding to build the leading A.I. technologies. In May, xAI raised $6 billion, while rival Anthropic raised hundreds of millions of dollars in 2023 and in recent months has floated the idea of more funding with investors. Mr. Musk did not respond to a request for comment about xAI. Details of the talks were earlier reported by The Wall Street Journal and The Information. (The New York Times has sued OpenAI and Microsoft for copyright infringement of news content related to A.I. systems.) Mr. Musk helped found OpenAI in 2015, alongside entrepreneur Sam Altman and a small group of A.I. researchers. He parted ways with the A.I. lab less than three years later, after a dispute over its direction. At the time, OpenAI was structured as a nonprofit organization. After Mr. Musk left OpenAI, Mr. Altman transformed OpenAI into a for profit operation, so that it could raise the enormous amounts of money needed to build A.I. technologies. These technologies learn skills by analyzing massive of amounts of digital data, which requires at least hundreds of millions of dollars in computing power. After ChatGPT's release in 2022, Mr. Musk created xAI to build similar technology. Through Mr. Musk's social media service X, xAI offers a chatbot called Grok. The start-up is using a facility in Memphis to develop its A.I. models on a network of thousands of high-powered computer servers. Around the same time, Mr. Musk sued OpenAI, arguing that OpenAI and two of its founders, Mr. Altman and Greg Brockman, breached the company's founding contract by putting commercial interests ahead of the public good. Mr. Musk dropped the suit months later, before reviving it in federal court in August. While xAI is independent from X, its technology has been integrated into the social media platform and is trained on users' posts. Users who subscribe to X's premium features can ask Grok questions and receive responses. Mr. Musk has said this technology is a path to artificial general intelligence, or A.G.I., a machine that can do anything the human brain can do. OpenAI makes the same argument about its technology. But Mr. Musk has said that unlike OpenAI, his company will "open source" its A.I. technology, sharing the underlying code with people and businesses. Mr. Musk has argued that this is a safer approach to A.I. development than closing the technology to others. He, like some others in the field, has long warned that A.I. could be dangerous and perhaps even destroy humanity. The tech industry is deeply divided over whether the code that underlies A.I. should be publicly available. Some engineers argue that the powerful technology must be guarded against interlopers while others insist that the benefits of transparency outweigh the harms.

Elon Musk's xAI reportedly in talks to raise new funding on $40B valuation - SiliconANGLE

Elon Musk's xAI reportedly in talks to raise new funding on $40B valuation Elon Musk's xAI Corp. is reportedly in talks with investors to raise additional funding on a $40 billion valuation, some five months after the company had previously raised $6 billion on a $24 billion valuation. The Wall Street Journal, citing people familiar with the matter, claims that xAI is looking to raise several billion dollars in the new funding round. The Journal does note, however, that the talks are in their early stages, meaning that terms could change or the talks could fall apart. Launched by Musk in 2023, xAI is aiming to develop an advanced artificial general intelligence system that surpasses current AI capabilities. The company is focused on building a safe, robust AGI that is driven by Musk's vision of creating beneficial and human-aligned intelligence. The company released its first large language model - Grok-1, late in 2023 before releasing Grok-1.5 in April and Grok-2 in August. The latest Grok-2 model can generate text, troubleshoot code, perform related tasks and analyze user-provided images. At the time of its release, xAI claimed that based on an evaluation comprising eight benchmark datasets that researchers commonly use to measure an LLMs' accuracy, Grok-2 achieved "performance levels competitive" with the most advanced LLMs on the market. Notable, on one test called GPQA, Grok-2 achieved higher scores than OpenAI's GPT-4o and Meta's Llama3 405B model, an impressive outcome for a relatively young AI company. Building advanced AI models requires training and processing power, with the latter being why, five months after raising $6 billion, xAI is seeking yet more funding. And the previous funding has, in large part, gone towards bringing online more processing power. In September, xAI announced that it had completed the assembly of an artificial intelligence training system that features 100,000 graphics cards. Called "Colossus," the system is claimed by Musk to be the "most powerful AI training system in the world" and runs on 100,000 Nvidia Corp. H100 graphics cards. While it is likely that Musk and xAI will be getting discounted rates on their bulk buys, the Nvidia H100GPU generally sells for around $30,000 to $40,000 each, putting the cost for the GPUs for Colossus before data center construction and running costs at around $3 billion give or take. Add to the mix that 100,000 H100s would also use approximately 35 megawatts of power, roughly the equivalent of the energy needed to power a small town, and the cost continues to spiral. For xAI, that's also just the start, with Musk announcing earlier this week that xAI plans to double its Colossus data center from 100,000 H100 GPUs to 200,000. The news that xAI is in talks to raise more funding comes as its competitors continue to either raise funds or hold discussions to do so - after all, building cutting-edge AI models doesn't come cheaply. Recent AI-related funding news includes OpenAI raising $6.6 billion on a $157 billion valuation on Oct. 2, while Anthropic PBC was reportedly in talks to raise new funding on a $40 billion valuation in September.

Report: xAI Aims to Raise 'Several Billion Dollars' | PYMNTS.com

Elon Musk's xAI reportedly aims to raise "several billion dollars" in a funding round that would value it around $40 billion. The funding discussions are in the early stages and the details could change, The Wall Street Journal (WSJ) reported Tuesday (Oct. 29), citing unnamed sources. In a Series B funding round completed in May, xAI raised $6 billion and gained a pre-money valuation of $18 billion. The company said at the time in a press release that it would use the new funding to take its first products to market, build advanced infrastructure and accelerate its research and development (R&D). Noting the products it had launched in the 10 months since Musk announced the formation of the company in July 2023, the release said: "xAI will continue on this steep trajectory of progress over the coming months, with multiple exciting technology updates and products soon to be announced." In September, xAI launched its Colossus 100k H100 training cluster, which Musk said in a post on X is "the most powerful AI training system in the world. Moreover, it will double in size to 200k (50k H200x) in a few months." The H200 is an Nvidia GPU designed to accelerate generative AI and large language models. Nvidia said at the time in a post on X that xAI's Colossus is "the world's largest GPU #supercomputer" and it came online "in record time." It was reported in July that American venture funding had reached its highest quarterly total in two years thanks to AI. Venture capital investments in the second quarter increased 47% over the first quarter, fueled largely by major investments in AI firms, such as the $6 billion raised by xAI and the $1.1 billion raised by CoreWeave. On Oct. 2, OpenAI raised $6.6 billion in new funding, nearly doubling its valuation to $157 billion. The company was previously valued at $86 billion early in the year after employees sold their shares. It was reported Oct. 20 that AI search company Perplexity is looking to raise about $500 million in a new funding round that would value it at $8 billion. The company was last valued at $3 billion this summer.

Elon Musk's xAI is reportedly trying to raise billions more

Elon Musk's AI company, xAI, is in talks to raise new funding at a valuation around $40 billion, according to The Wall Street Journal. xAI hopes to raise several billion dollars in the round, adding to the $6 billion in Series B funding that the company raised in May. The rumored valuation would nearly double xAI's current post-money valuation of $24 billion. Musk formed xAI last year. Soon after, the company -- which recently moved into OpenAI's old offices -- developed its first model, Grok, to power various features on Musk's social network, X (formerly known as Twitter). xAI now offers an enterprise API. And the company says it's training the next generation of Grok models on a massive cluster of 100,000 Nvidia GPUs. Musk often asserts that X's data gives xAI a substantial leg up compared to rivals. This month, X changed its privacy policy to allow third parties, including xAI, to train models on X posts.

Elon Musk's xAI in talks to raise funding valuing it at $40 bln, WSJ reports

Oct 29 (Reuters) - Elon Musk's AI startup xAI is in talks with investors for a funding round that would value the company at around $40 billion, the Wall Street Journal reported on Tuesday, citing people familiar with the matter. xAI hopes to raise several billion dollars in the new funding round, WSJ said, adding that the cash raised would be added to the $40 billion valuation. The funding discussions are in the early stages, which means that terms could change or the talks could fall apart, the report said. Elon Musk did not immediately respond to a Reuters request for comment. The startup raised $6 billion in series B funding in May, reaching a post-money valuation of $24 billion, backed by investors that included Andreessen Horowitz and Sequoia Capital. Musk, the billionaire entrepreneur, launched xAI in July 2023 as an alternative to OpenAI's ChatGPT. In March, xAI said it would open-source its ChatGPT challenger "Grok", giving the public free access to experiment with the code behind the technology, aligning xAI with firms such as Meta (META.O), opens new tab and France's Mistral, which also have open-source AI models. Reporting by Juby Babu in Mexico City; Editing by Alan Barona Our Standards: The Thomson Reuters Trust Principles., opens new tab

Elon Musk in funding talks with Middle East investors to value xAI at $45bn

Elon Musk is in talks with some of the largest investors in the Middle East about a fundraising for his artificial intelligence start-up that could roughly double the one-year-old company's valuation to $45bn. According to six people with knowledge of the conversations, xAI is in early talks with new and existing investors, seeking fresh capital to compete with OpenAI, which recently raised more than $10bn in debt and equity, as well as Anthropic and Big Tech rivals including Google and Meta. Musk has approached investors in Qatar and Saudi Arabia about backing his AI start-up, according to three of the people. He has also talked to current investors including Sequoia Capital and Valor Equity Partners. A potential valuation of $45bn has been floated with investors, close to double the level reached in a funding round this summer, said two of the people. Valor is expected to lead the round and Sequoia to participate, according to two other people with knowledge of the discussions, who cautioned they were at a preliminary stage and that the target valuation and participation could change. Sequoia declined to comment. Musk and Valor did not immediately respond to a request for comment. Musk's relationship with Saudi Arabia deteriorated during the serial entrepreneur's abortive attempt to take Tesla private in 2018. He became embroiled in a spat with the Saudi sovereign wealth fund, the Public Investment Fund, and its governor, Yasir al-Rumayyan, after tweeting that he had financing in place to take Tesla private. Days later, Musk said the PIF had agreed to fund the deal. The transaction never materialised, and Musk accused Rumayyan of throwing him "under the bus", according to subsequent court filings. But Musk, who has become a close ally of Republican presidential candidate Donald Trump, has been working to engage the Gulf kingdom in recent months and has raised the prospect of investment in xAI, according to a person with knowledge of the conversations. In a sign that the relationship has largely been repaired, Musk addressed Saudi Arabia's Future Investment Initiative conference this week. "It has been raised," said a person familiar with Musk's talks with Saudi investors. "These guys are always willing to have a conversation about new investment opportunities and he's building one of the few AI companies at scale, so there shouldn't be any surprise they are talking about it, but I don't think it's very advanced. In the last few months, he's been trying to engage and have dialogue again [after the Tesla spat]." On Tuesday, Rumayyan told the same conference that it was reducing the $930bn sovereign wealth fund's targeted allocation for international investments, though AI remained a priority for the kingdom. Rumayyan also said the PIF was in talks with potential investors and wanted to make Saudi Arabia a "global hub" for AI. Musk has also approached Qatari investors, according to one of the people familiar with the talks. The state's sovereign wealth fund, the Qatar Investment Authority, previously helped finance Musk's takeover of Twitter. Oil-rich Gulf states, including Qatar, Saudi Arabia and the United Arab Emirates, have all expressed ambitions to be leading players in AI, as they have significant financial firepower and abundant energy resources. Last month, Groq, the US AI company, said it planned to establish the world's largest inferencing data centre in Saudi Arabia after signing a deal with Aramco Digital, the tech arm of the kingdom's state-owned oil company. The Wall Street Journal first reported on xAI's fundraising plans. The Information reported Musk was in discussions with Sequoia and Valor. Musk is making overtures to the Middle East at the same time as he is becoming increasingly central to the US presidential election. He has donated tens of millions of dollars to Trump's campaign and affiliated groups, appeared at Trump rallies and used his social media platform X to amplify pro-Trump messages. "I've been playing a significant role in this election," Musk told the Future Investment Initiative audience on Tuesday. Funding for AI start-ups has exploded since OpenAI released its popular ChatGPT chatbot in late 2022. In the first half of this year, AI start-ups attracted more than 40 per cent of all US venture funding, according to PitchBook. Start-ups building the most powerful large language models, which power AI, are burning through billions of dollars a year and are reliant on close relationships with wealthy investors, chipmakers and cloud providers to meet the financial and technical requirements for training their models. As a result, top start-ups are engaged in a near-permanent fundraising effort. Companies in the industry are also riding a wave of renewed investor interest to reprice themselves following OpenAI's blockbuster funding round this month that gave the company a $150bn valuation.

Musk's xAI in Talks for $40 Billion Valuation, WSJ Says

Elon Musk's artificial intelligence startup xAI is in talks to raise new funding at a $40 billion valuation, the Wall Street Journal reported, just months after a separate financing for the startup raised $6 billion. The funding discussions are still early, the paper reported, citing people familiar with the matter, and the details could change or the talks could fall apart.